In Israel, almost one-third of young children (from birth to age 4) live below the poverty line and more than half of Haredi and Arab children in this age group live in households below the poverty line. A new study by the Taub Center looks at these households in an attempt to identify the characteristics that place their children at the highest risk of poverty and the resulting negative effects on their children’s development and future achievements.
The study by the Taub Center researchers Dr. Yael Navon and Liora Bowers looks at the incidence of poverty (as defined in the National Insurance Institute Poverty Report 2018) in households with children up to the age of 4. The study looks at the characteristics and environment of these households, and the sources of household income according to Central Bureau of Statistics (CBS) data for 2018.
About one-third of children from birth to the age of 4 live in poverty, most are Arab or Haredi
In Israel in 2018, the incidence of poverty was among the highest in the OECD countries. About one-quarter of households that were below the poverty line had children under age 4, and 30% of all children under that age lived below the poverty line. In a breakdown by population group, it was found that more than one-half of Arab and Haredi households with children up to the age of 4 live below the poverty line, 58% and 55%, respectively, as opposed to 8% of non-Haredi Jewish households with young children. Moving from households to children shows that the situation is even worse – 63% of Arab children under the age of 4 and 58% of Haredi children under this age live below the poverty line, as opposed to 9% of non-Haredi Jewish children.
Non-Haredi Jews account for about 65% of all households with children up to the age of 4 in Israel, and they account for about one-fifth (22%) of the households with young children below the poverty line. Arab households are about 16% of the households in Israel, but they account for 42% of households with young children below the poverty line, while Haredi households (19% of all households), account for 37% of households with young children below the poverty line.
Researchers at the Taub Center examined the characteristics of households with young children that are below the poverty line and found that the incidence of poverty is particularly high among households without any wage earners (87%) or with only one wage earner (57%). Although the probability that children of two working parents are living below the poverty line is lower, about one-tenth of them nonetheless live below the poverty line. In a breakdown by sector, among households with children under the age of 4 that have two wage earners and income levels below the poverty line, the highest proportions were found among Haredim (39%) and Arabs (21%).
“Our research found that 22% of children below the poverty line live in a household with at least two wage earners,” says Dr. Navon. “When we investigated the phenomenon, we found that wage earners in these households are most likely to work fewer hours, are more likely to both be self-employed, and have relatively lower levels of education. These findings indicate that it is not enough to encourage parents to work, and that additional intervention programs should be considered.”
Population group is an important predictor of poverty rate, and government assistance is not a sufficient remedy
Researchers at the Taub Center found that, among the Arab population, sector is an important predictor of living below the poverty line, even after controlling for household characteristics, including number of household members, work hours of the wage earners, and their levels of education. Thus, the likelihood that a child from birth to age 4 in an Arab household will live below the poverty line is almost six times that of a child from a Jewish household. In contrast, the higher incidence of poverty among Haredi Jews is largely explained by the large number of children, the low number of work hours, and the relatively low share of adults with an academic education in their households.
Government transfer payments reduce the incidence of poverty by about 11% among children up to the age of 4. However, the effectiveness of government benefits varies across population groups: transfers raise 27% of non-Haredi Jewish children to above the poverty line as compared to only 12% of Haredi children, apparently because there are more children in Haredi households. However, it is more concerning that among Arab children, transfer payments actually served to raise the incidence of poverty by 2%. The explanation is that, for a relatively large share of low-income Arab households, mandatory payments (income tax, National Insurance payments, and health insurance) are greater than the social benefits they received.
An examination of the sources of income in households with children up to the age of 4 that are below the poverty line shows that the proportion of income from labor in Arab households is similar to that in non-Haredi Jewish households, i.e., about 75%, as opposed to 54% among Haredim. The differences are large with respect to government transfers as well. For Haredi Jews, 36% of household income is comprised of government transfers — primarily support for yeshiva students (14%) and the child allowance (4%) — while among non-Haredi Jewish households and Arab households the rates are about 20% and 23%, respectively. The share of income from the negative income tax, which is meant to encourage parents to work, is particularly low among all of the groups.
Most of Haredi and Arab households below the poverty line own their own home
Young children living below the poverty line, and particularly in the Arab sector, generally live in more crowded households and in residential areas with a low socioeconomic ranking. With respect to home ownership, however, it is in fact the Haredi and Arab households that tend to own their own home (with or without a mortgage): 72% and 82%, respectively, while among non-Haredi Jews, the rate is 40%.
An examination by the Taub Center found that spending per capita is lower in all categories in households below the poverty line. Furthermore, even though households below the poverty line have more young children on average, they spend less on education and early childhood care. Among these households, the highest expenditure is on daycare, family homecare, and infant care – NIS 890 per month on average (as opposed to NIS 1,928 per month in households above the poverty line). The average expenditure on private preschool in these households is NIS 581, as opposed to NIS 2,233 in households above the poverty line – almost four times the amount. The differences in this type of expenditure are likely to be the result of the following factors: in some of these households there is a single wage earner or the second wage earner works only part-time and, therefore, the children need fewer hours in educational and care frameworks; in supervised care frameworks, there are higher subsidies for low-income families; and there are differences in daycare costs across population groups and the residential area’s socioeconomic ranking. In this context, it is worth mentioning that variation in the price of educational frameworks is also likely to be an indication of differences in the quality of care.
“It is reasonable to assume that the current situation is not significantly different from what is indicated by the 2018 data that was used in this research; the general incidence of poverty has remained almost unchanged since then and government assistance to households below the poverty line has not changed dramatically,” according to Dr. Navon.
The researchers propose several directions for policy that are likely to contribute to a reduction in the share of children under the age of 4 that live below the poverty line:
- Identifying the most vulnerable populations, such as households where the head of the household is below the age of 30 or households in which both wage earners are self-employed, and determining whether there is a need to provide them with targeted assistance.
- Continuing to encourage labor force participation, an increase in work hours and obtaining an academic education, while examining the negative income tax mechanism in depth and the effectiveness of using it to encourage labor force participation.
- An assessment of the income support and unemployment insurance mechanisms, including the size of the benefit, the criteria for eligibility, the application rates, and their impact in each sector.
- Government transfers – In view of the research findings that show that government transfers do not assist Arabs as much as Haredi and non-Haredi Jews, it is worthwhile evaluating making modifications in particular with respect to this population group.
- Early childhood education and care – The early childhood education program presented by the government at the beginning of the year, which includes, among other things, measures to improve the quality indices of the frameworks and provide financial benefits to working parents, is a worthwhile endeavor; however, in order to ensure that the assistance reaches the populations that need it most, and among them, many parents who do not work, there should be efforts to increase those eligible for assistance. This can be accomplished by, among other things, expanding the incentives for labor force participation and ensuring their accessibility for the target populations.
The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.
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